Stocks to watch: New Zealand equity preview

Tuesday 14th October 2008

The following stocks may be active on the New Zealand exchange after developments since the close of trading yesterday.

Themes of the day: Stocks on Wall Street rallied, sending the Standard & Poor's 500 Index to its biggest gain since 1987. European nations coordinated efforts to flood the financial system with dollars and pledged funds to avert more bank failures. The New Zealand dollar gained against the US dollar and yen, while declining against the Australian dollar.

Dorchester Pacific (DPC): The company's Dorchester Finance Ltd. unit agreed to sell the equipment rentals portion of its loan book for $12.5 million to Rent Plus, according to a statement yesterday. The finance unit hopes to present investors with a plan for deferred payments late this month or early November. Separately, the central bank said finance companies may be eligible for the government deposit guarantee. Dorchester shares traded yesterday at 6.5 cents and have dropped 90% this year.

Infratil (IFT): The investment company managed by Morrison & Co. yesterday said it has signed up 30,000 people in Wellington to its Snapper card, which can be used to pay for bus fares and at registered outlets for items such as coffee. Snapper could be applied to contracts in other cities. The shares rose 6 cents to NZ$1.95 yesterday and has fallen about 33% this year.

NZ Farming Systems Uruguay (NZS): The dairy farm developer postponed plans to raise capital to buy more land in Uruguay and Brazil because of turmoil in world markets, even though the economics of buying more farms remains compelling, it said. The stock fell to NZ$1.09 yesterday and has fallen 28% in the past month.

Telecom (TEL): The biggest company on the NZX 50 Index may advance after Wall Street rallied. The stock is yielding almost 17% on dividend payments since tumbling this year while its stock is trading at 6.7 times earnings. Australian rival Telstra Corp. has a dividend yield of 10.2% and trades at 13 times earnings. The shares traded at NZ$2.48 yesterday, the lowest in more than a decade.

Warehouse Group (WHS): Australia's largest retailer, Woolworths, is considering a suggestion from the Commerce Commission that it re-apply for clearance to acquire Warehouse rather than fight for the right through the courts. The stock traded at NZ$3.43 yesterday and has gained 4% in the past month.

By Jonathan Underhill

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